Commentary

New study: NC should follow Boston/Silicon Valley model not South Carolina/Mississippi

There’s a new “must read” today from economist Patrick McHugh at the Budget and Tax Center. Here’s the summary:

North Carolina currently faces an important choice between two different paths for creating jobs and strengthening the economy, according to a new report from the Budget & Tax Center, a project of the NC Justice Center. One would make the state a research and commercial hub rivaling Silicon Valley and the Boston’s Route 128 corridor and the other would emphasize low taxes and lax regulation.

Governor McCrory often emphasizes the innovation-driven strategy, calling for North Carolina to become the third “vertex of innovation” through proposals that would build on decades of public investment in education as well as partnerships between research institutions and the private sector. However, the state also continues to reduce taxes, particularly for the wealthiest North Carolinians, and ask less of large, profitable multinational corporations when it comes to paying for public services. North Carolina now faces the decision about whether to compete on price or on quality.

“The low-tax strategy is about competing on price – making the state a cheap place to do business in the short run by reducing companies’ taxes,” said Patrick McHugh, policy analyst with the Budget & Tax Center and author of the report. “The innovation-driven strategy is about enabling North Carolina workers and companies to produce quality goods that cannot be found everywhere. Cutting taxes has already scaled back precisely the kinds of investment that are needed to compete with the Bostons and Silicon Valleys of the world.”

These innovation centers have both outdone North Carolina and our neighbors to the south in the aftermath of the recession. Massachusetts had 4.1 percent more jobs in February of 2015 than it did at the end of 2007, and even California, which was slammed particularly hard by the collapse of the housing market, has managed to get employment back to 3.4 percent above the pre-recession level. Read more

Commentary

State Senate Committee to hear from…the University of Phoenix?

The North Carolina Senate Workforce and Economic Development Committee has scheduled a meeting for this Wednesday at noon and here is the official description of the agenda:

“Presentation from the NC Chamber and the University of Phoenix about the workforce needs of manufacturing companies around the state.”

You got that? In a state that is home to some of the best public universities and community colleges in the nation (not to mention several expert homegrown workforce and economic development experts), the North Carolina Senate will discuss the workforce needs of the state with a far right, ALEC-inspired anti-tax lobby group and a controversial for-profit, online college.

Next up (at the risk of giving these folks ideas): The Senate Agriculture, Environment and Natural Resources Committee discussing the future of the state’s air, land and water with lobbyists for Koch Industries.

News

Former #ncga Rep. LaRoque gets delay in sentencing date

Former state Rep. Stephen LaRoque will find out his fate this summer , with his sentencing on a criminal charge of stealing federal funds now pushed back to July.

LaRoque-PC

Stephen LaRoque

LaRoque, a Kinston Republican and former co-chair of the powerful House Rules committee, plead guilty in January in front of Senior U.S. District Court Judge Malcolm Howard to a charge of stealing $150,000 from federally-funded economic development groups he ran.

The other 11 charges he faced were dismissed as a condition of his plea agreement. He also agreed to repay $300,000 that prosecutors contend he stole from the non-profit he founded, East Carolina Development Company.

He was supposed to be sentenced on May 12, but the sentencing has been pushed back to the week of July 7. In motions filed in court, his attorney said LaRoque needed more time to provide financial information to the federal probation officials writing up the pre-sentencing report that Howard will use to decide LaRoque’s sentence.

LaRoque faces up to 10 years in a federal prison, as well as a fine of $250,000, on top of $300,000 he agreed to pay in restitution as a condition of his plea agreement. Read more

Commentary, NC Budget and Tax Center, Raising the Bar 2015

Raising the bar: NC must invest in Main Street businesses to promote community economic development

Editor’s note: This is the latest installment in “Raising the Bar” — a new series of essays and blog posts authored by North Carolina nonprofit leaders highlighting ways in which North Carolina public investments are falling short and where and how they can be improved.  

The past few years have brought a major shift in how the state of North Carolina approaches economic development. Legislation passed in 2014 eliminated the state’s seven economic development partnerships, and replaced them with eight Partnership for Prosperity Zones. These zones were placed under the umbrella of a new public-private partnership to manage North Carolina’s economic development efforts.

The establishment of the public-private partnership signaled a new direction for economic development in North Carolina, one that is focused more on the attraction and retention of high-growth, innovation-focused, large employers and not as much on the businesses on Main Street.

This new direction was reinforced in the state budget. The Fiscal Year 2014 budget enacted major funding cuts to nonprofit community economic development organizations, organizations which play a critical role in ensuring that jobs and investment reach our most under-served and distressed communities. This is particularly true as the state’s economic development structure focuses more on business attraction and retention, and less on local economic development. The Support Center was included in these budget cuts, along with the Institute for Minority Economic Development, the Association of Community Development Corporations, the Indian Economic Development Initiative, the Community Development Initiative, and others.

Gov. Pat McCrory’s 2015-2017 biennium budget continues down this path. The Governor’s job creation proposals speak much about entrepreneurship and investing in innovation. He proposes $15 million annually for the Venture Multiplier Fund, to increase investment in early-stage companies, and $2.5 million annually for the Rallying Investors and Skilled Entrepreneurs program, which would recruit investors and entrepreneurs to the state. A $5 million appropriation for the One North Carolina Small Business Program would also invest in high-growth, high-tech small businesses.

All of these programs, though they are geared toward entrepreneurs and small businesses, do not address the capital or training needs of “Main Street” businesses—the local small businesses that are the backbone of economies in communities across the state. Read more

News

Private funders of NC’s new economic development group may get advisory board spots

North Carolina’s newly privatized economic development group may create a business advisory board with seats designated as rewards for private funders, board members said during a meeting Friday.

The Economic Development Partnership of North Carolina gets most of its funding from state taxpayers, but members of an advisory board could draw its membership from its private funders, said Jim Whitehurst, the CEO of Red Hat and a member of the public-private partnership.

Jim Whitehurst, Red Hat CEO. Source: Red Hat

Jim Whitehurst, Red Hat CEO. Source: Red Hat

At Friday’s meeting, Whitehurst said the structure of the business advisory board wasn’t finalized, but he envisioned 20 members from a variety of industries and areas of the state. He said the advisory board would be designed in conjunction with the group’s fundraising plan.

Several seats on the advisory council may go to those who donate to the private arm of the partnership, Whitehurst said, in response to a reporter’s questions after the open portion of Friday’s meeting.

“There may be a few seats for people that are large contributors,” Whitehurst said.

The Economic Development Partnership of North Carolina opened last October, when the state’s business recruitment, tourism and marketing functions were moved out of the state Commerce Department to the newly formed private non-profit.

Lawmakers, when they authorized the move, held the group subject to open meeting and public records laws, and members of the partnership’s board also must adhere to the state ethics law.

The general public is the biggest backer of the partnership, with more than $16 million in public dollars funding the venture.

Read more